Latest Retail Casualty: Eddie Bauer
The generations-old clothing company files Chapter 11; CCMP Capital Advisors steps in as stalking horse.
June 18, 2009
Eddie Bauer, the privately-held clothing retailer, filed for Chapter 11 protection and private equity firm CCMP Capital Advisors plans to take control of the company.
Subject to approval, CCMP will pay $202 million altogether to acquire Eddie Bauer’s assets. The company anticipates it will complete the sale process in 60 days or less. The company said all of its stores will remain open during that time.
DIP financing was supplied by existing revolving credit lenders Bank of America, GE Capital and CIT Group/Business Credit Inc. of $100 million.
Often, recently, private equity has stepped in quickly to support a company heading into the Chapter 11 process. RHJ International and the Carlyle Group have separately stated intent to Metaldyne to purchase different assets from the bankrupt auto parts maker as it dissolves. Another auto sector bankruptcy, Fleetwood Enterprises, an RV maker, was also targeted by private equity, this time, by American Industrial Partners.
This is not Eddie Bauer’s first interaction with the bankruptcy process; it was sold by bankrupt The Spiegel Group in 2004. In 2006, the company was bought by Sun Capital Partners and Golden Gate Capital for $614 million, including debt, which, at that time, was about $328 million.
Eddie Bauer did not comment.
The move marks a bit of a strategy shift for CCMP; in September 2008, when its chairman, Greg Brenneman, spoke with M&A Journal, he said distressed buys were not a salient part of the private equity firm’s strategy.
“[G]oing through the bankruptcy process and bringing [an asset] out the other side really isn't the type of investments we're focused on,” Brenneman said then.
With offices in New York, Houston and London, CCMP Capital offers growth equity investment and offers buyouts to companies across industries including food, retail, healthcare and energy. CCMP counts sub chain Quizno’s, Norwaco (a European frozen food company), food services company ARAMARK and AMC Entertainment among its consumer holdings; it has also made nearly two dozen exits from prior investments in that space.
Eddie Bauer’s legal advisor is Latham & Watkins, its financial advisor is Peter J. Solomon Co., and its restructuring advisor is Alvarez & Marsal. CCMP Capital’s legal advisor is Weil, Gotshal & Manges.
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